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The facts have been overshadowed by rhetoric at the Wisconsin Capitol, where protesters and politicians have been engaged in a tense standoff over the governor’s proposal to strip most public employees of their collective-bargaining rights.
Gov. Scott Walker insists the state is broke and must make drastic spending cuts. Unions believe Republican leaders are trying to wipe them out. Two weeks into the debate, The Associated Press assessed the claims in an effort to shed light on what’s at stake.
Walker says his plan is needed to ease a deficit that is projected to hit $137 million by July and $3.6 billion by mid-2013.
The budget as it stands now is balanced, and Walker is under no legal obligation to make changes. But by mid-summer, the state could come up short on cash to pay its bills, largely because of a projected $169 million shortfall in its Medicaid program.
Walker’s plan comes up with the money for this year by refinancing debt to save $165 million and forcing state employees to pay for half the cost of their pensions and twice their current health care premiums. That is equivalent to an 8 percent pay cut.
Those increases in benefit contributions would raise $30 million by July and $300 million over the next two years.
But the flashpoint is his proposed elimination of collective bargaining rights. Nearly all state and local government workers would be forbidden from bargaining for any wage increases beyond the rate of inflation.
Walker argues the sweeping step is necessary to balance the budget not only over the next two years but into the future. School districts, cities, counties and other local governments need the flexibility, he says, to deal with more than $1 billion in state aid cuts Walker will announce Tuesday in his two-year budget plan.
That’s certainly one way to tackle the problem, but it’s not the only solution.
Walker has refused even to consider some of the other ways to raise the massive amount of money needed. He repeatedly has said his measures are the only way to fix the state’s budget problems now and for the long term as he proposes deep cuts to state and local governments in his upcoming two-year budget.
He also is resolved not to raise taxes — an option used by Democrats who controlled the Legislature when the state faced a deficit that was nearly twice as large as the one Walker inherited. The Democrats also relied heavily on federal stimulus aid, which the state does not have available this time around.
Not raising taxes and not tapping federal aid leaves Walker with few alternatives other than reducing the money the state gives to schools and local governments or reducing Medicaid to the extent allowed under federal law.
Aid to schools and local governments is more than half of the entire state budget. Medical assistance programs are 9 percent, as is funding for the state prison system and money for the University of Wisconsin system. Walker won’t make cuts to the prisons, but he’s expected to make deep reductions in higher education.
As for Medicaid, Walker gives himself as much leeway as possible under the bill that passed the Assembly early Friday but remains hung up in the Senate because of 14 AWOL Democrats who skipped town to stymie efforts to vote on the proposal in that chamber.
Walker’s bill gives his administration the power to make any changes necessary to Medicaid to save money, regardless of current law and without approval of the Legislature. Medicaid is a $1.2 billion part of the budget, but even with the freedom the bill gives him, Walker will be hamstrung by federal law that limits how many cost-saving changes states can make without a waiver.
Walker’s new health department secretary, Dennis Smith, is a former federal Medicaid official who has advocated that states drop out of the program entirely. That position and others taken by Smith are worrisome to advocates for the poor, disabled and elderly, who are largely the beneficiaries of the program.
Walker has not released details of what he may cut in Medicaid. At least some of the cuts will be contained in his budget coming out Tuesday.
But the key to that plan, according to Walker, is ending collective bargaining rights. Doing that isn’t about busting unions, Walker argues, but balancing budgets.
If he’s intent on using cuts in state aid to balance the budget, eliminating collective bargaining does go a long way to achieving one of his key goals — giving local communities the ability to deal with the reductions.
With 3,000 units of government in Wisconsin, all in various stages of contractual negotiations, eliminating collective bargaining may be the only way they could quickly deal with the cuts, said Todd Berry, president of the nonpartisan Wisconsin Taxpayers Alliance.
Walker has also threatened that if the bill doesn’t pass, up to 1,500 people may be laid off by July in order to achieve the savings necessary to balance the budget, with another 6,000 layoffs by the middle of 2013, with an equal number on the local level.
That layoff threat is a real possibility if schools are going to see a large cut in aid and have their ability to raise property taxes restricted, Berry said.
“If 80 percent of your budget is personnel, and you’re having state and your property tax revenues reduced while your costs are going up, you can’t solve your problem without addressing compensation,” Berry said.
In that case, “you only have two choices — reduce the number of people or keep the people and reduce the amount of compensation,” he said.
Karen Bloczynski, a fourth-grade teacher in Marshfield, said she expects to be laid off under Walker’s plan. With 35 years of experience and a $70,000 salary, Bloczynski said she’s more expensive than younger colleagues.
Bloczynski said she’s sent letters to a local electrician, a furniture store and several restaurants warning them they’re likely to feel the effect.
“Teachers spend money in their communities,” she said.
Teachers have been a large part of the protests that have enveloped the Capitol for 11 days, including a massive 68,000 person demonstration. The statewide teachers union represents about 39,000 people.
The central part of Walker’s argument is that government workers have long escaped painful cuts that those in the private sector have had to bear. That ignores the fact that under Walker’s predecessor, Democratic Gov. Jim Doyle, state workers were forced to take furlough days that amounted to a 3 percent pay cut. State employees have also not had a raise for more than two years.
Even so, Walker has portrayed public employees as the “haves” and private workers as the “have nots,” saying government workers can afford trims to their salaries and benefits because on average they earn more than private-sector workers.
This is true as a straight average, but several national reports of public versus private pay say it’s also misleading.
In a report released in December 2010, the federal Bureau of Labor Statistics found that the average state/local government worker earns $40.10 an hour in salary and benefits. The same report found the average private worker earns $27.68 an hour in salary and benefits.
But the report was quick to note that this is not a direct comparison. Government workers tend to be better-educated than their private-sector counterparts, and government jobs are more likely to be professional or managerial as opposed to the many more manufacturing and sales jobs in the private work force.
In fact, studies that compare salaries and benefits for similar jobs between the public and private sectors show that government workers lag.
An April 2010 report by the Center for State & Local Government Excellence — a nonpartisan, Washington-based group with Republicans and Democrats on its board of directors — found that in 2008, state workers nationwide earned 11 percent less and local workers earned 12 percent less than private workers with comparable education levels.
The same study found that in Wisconsin between 2000 and 2008, total compensation for state and local workers was less than comparable private sector workers.
Jeff McArthur, a sergeant at Black River Correctional Center, estimated under Walker’s plan he would lose about $400 a month from his $45,000-a-year salary. The 41-year-old father of three said his family would definitely feel the difference.
“The first things that are going to go are luxury things,” McArthur said. “We’ll cut back on our cable. We’ll cut back on our cell phones. We won’t take family trips, stuff like that. We are not rich. We just want to have a good middle class life. We’re not looking to be rich. We’re just looking to get by.”
Copyright © 2011 The Associated Press